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<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="a couple kiss on their wedding day under a sign reading &quot;craft beer rules&quot;" height="683" width="1024" msid="92111168" hostid="261"></div><ul class="summary-list"><li>I used to think I'd retire like my dad; he worked for the same employer for decades and achieved "Freedom 55."</li><li>With life and work so uncertain in COVID's wake, though, I shifted gears to focus on something new.</li></ul><p>My dad retired at 55 with a wide-open horizon before him: no plans, no commitments, no worries. After decades in the child and youth services industry, he was ready to kick up his feet, flip on the radio, and settle into his golden years — with a healthy pension to support him and my mom.</p><p>As a union worker employed by a municipal agency in Toronto, he knew early on in his career that if he worked hard for long enough, he'd have a guaranteed income in <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword>. I can remember hearing about his "Freedom 55" plan from a young age, watching him go out for strategic promotions that would boost his pension.</p><p>In 2010, when I started my career, I had moved to the US from Canada and the dust from the Great Recession was just beginning to settle. It is an understatement to say I was walloped by culture shock. I had no idea <a href="https://www.businessinsider.com/personal-finance/what-is-401k">what a 401(k) was</a> let alone how to use one when it was offered, and it frankly hadn't occurred to me that I'd have to save <em>on my own</em> for retirement. I was 23 and knew only one retired person, my dad, and I thought pretty much everyone's retirement looked the same. Suffice to say I missed out on many years of savings before finally getting it together.</p><p>When I did start tucking money into a 401(k), around 30, it was with the expectation that I'd follow in my father's footsteps — I'd stop work at a reasonable age (say 65 or so), then enjoy relaxing days with my family and friends, traveling, seeing movies and live shows, working on house projects, and generally taking it easy. But the COVID-19 pandemic flipped a switch in my brain. </p><h2><strong>I suddenly started rethinking my ideal 'retirement'</strong></h2><p>Maybe it was watching my friends get laid off left and right, or feeling, suddenly, the fragility of life, work, and the balance of the two, but at some point in 2020 I abruptly stopped picturing my cottage-oriented retirement and suddenly started to think about building my own business — something that was mine, something that would bring me joy. A pandemic cliché, I know, but it's a cliché for a good reason. </p><p>When I casually mentioned my small-business dreams to my husband one night, he said he'd been thinking the same thing. Maybe it was all the reality restaurant TV we'd been watching during lockdown, or lingering memories of <a href="https://www.businessinsider.com/personal-finance/wedding-budget-tricks-learned-as-bridal-editor">our brewery wedding</a>, but we started dreaming of a place we'd want to be, many years into our retirement: a <keyword id="11939754" type="UNKNOWN" weightage="60" keywordseo="brewery" source="Orion">brewery</keyword> with a stage where we could host live shows — theatre, dance, poetry. There would be food trucks, there would be laughter, there would be art and friends and very good beer. Watching so many Americans shift from day jobs to entrepreneurship during the pandemic convinced us it was possible — we just needed the time… and the money.</p><p>Ah, the money. While we're nowhere near throwing open the brewery's doors today, we've started to think about how to finance our "retirement" dream (because let's be honest, "retirement" today does not mean Freedom 55 for most people — it means leaving your 9-to-5 at whatever age and doing work that can sustain your lifestyle but doesn't require punching a clock, so to speak). We've got a few strategies going to get our financial ducks in a row.</p><h2><strong>1. We can leverage our house</strong></h2><p>Before the brewery, I really only had one big-picture money goal: to buy a house. I didn't think it would happen for me until much later in life, but in 2020, my husband and I decided to move from expensive Los Angeles to a lower cost-of-living city and buy a home. </p><p>With our relatively small mortgage of less than $250,000, we can make extra payments toward our principal now and be in a position to <a href="https://www.businessinsider.com/personal-finance/home-equity-loan-vs-heloc">leverage our home's equity</a> in about a decade or less. </p><h2><strong>2. We're saving and investing</strong></h2><p>We're still saving into traditional retirement accounts (because life is long and we'll need that money eventually) but we're also setting aside cash every month into savings and brokerage accounts with a plan to put it toward our business. </p><p>Our "education savings" account is there to support us as we learn new skills, and the money in our brokerage account will be available to cushion us if and when we get the business off the ground.</p><h2><strong>3. We're building our credit scores to take out a small-business loan</strong></h2><p>I'm sure we'll need to borrow money for the brewery at some point, whether it's to buy the industrial supplies we need to start brewing or to rent a space to house the business. With good credit, we can get the best rates available. So we're doing everything we can now to <a href="https://www.businessinsider.com/personal-finance/ways-boost-credit-score-in-day-period-2022-4" target="_blank" rel="noopener">bump up our scores</a>, like paying off our credit cards in full every month and keeping our credit utilization rates low.</p><h2><strong>4. We're investing in home-brew supplies to actually learn the craft of beer-making</strong></h2><p>If you've been rolling your eyes while reading this <keyword id="11898458" type="UNKNOWN" weightage="60" keywordseo="essay" source="Orion">essay</keyword> wondering what skills I think I have, exactly, that would qualify me to open a brewery, I don't blame you — I frankly have none. This business is a <em>dream</em> at the moment, and it'll take work to get to the finish line. </p><p>For now, we're investing in home-brew supplies and turning our basement into a workshop. We have to start somewhere. Come by for a drink?</p>

The pandemic upended my lazy retirement plans, and now I'm taking 4 steps to save for my new dream: owning a brewery

<p class="headline-regular financial-disclaimer">Our experts answer readers' investing questions and write unbiased product reviews (<a href="https://www.businessinsider.com/personal-finance/investing-rating-methodology" class="not-content-link" target="_blank">here's how we assess investing products</a>). Paid non-client promotion: In some cases, we receive a commission from <a href="https://www.businessinsider.com/personal-finance/our-partners" class="not-content-link" target="_blank">our partners</a>. Our opinions are always our own.</p><div type="image" title="Financial planner Jovan Johnson" height="2244" width="4480" msid="91795435" hostid="261"></div><ul class="summary-list"><li><keyword id="14029591" type="UNKNOWN" weightage="60" keywordseo="early-retirement" source="Orion">Early retirement</keyword> is popular with my clients right now, and I always offer the same advice.</li><li>If you're retiring early, make a plan for your new free time. And plan for healthcare and other costs.</li></ul><p>A common theme that I have been noticing with my clients lately is the desire to retire early. Many people are considering an early or partial <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> for more fulfilling roles. However, the reality of leaving work early can be far different than expected. </p><p>Early retirement is not for everyone. According to an <a href="https://www.ebri.org/docs/default-source/rcs/2020-rcs/rcs_20-fs-2.pdf">Employee Benefit Research Institute (EBRI)</a> 2020 survey, only 11% of today's workers plan to retire before age 60. If you fall within the 11% crowd, there are a few things you need to consider before deciding on early retirement. </p><h2><strong>1. Figure out what you want to do with your time during retirement</strong></h2><p>During our working years, we typically have many activities happening throughout the day to keep us occupied. Whether you are passionate about various hobbies, volunteering your time, or traveling the world, it is essential that you figure out how you want to spend your time during retirement. Many people believe that they will be able to easily fill their time, only to find themselves bored during their transition. </p><p>Now is the time to partake in all the things that you may have put off for years. Make sure that you come up with a plan for <a href="https://www.businessinsider.com/personal-finance/financial-independence-retire-early">early retirement</a>. </p><p><em><strong>Related</strong>: The <a href="https://www.businessinsider.com/personal-finance/best-retirement-plans">best retirement plans</a> »</em></p><h2><strong>2. Know that there may be a lack of human/social connection due to your peers still working</strong></h2><p>With a traditional retirement, many of your peers/friends will also be retired or nearing retirement. Therefore, you could have endless dinner parties, brunch dates, and time with the people you love and care about the most. </p><p>With early retirement, many individuals start to experience a lack of social interaction since their peers are all likely still working. While you may have time to play golf or go to the beach during the day, your friends who are working 9-to-5 don't have that luxury. </p><p>In fact, I have seen clients opt for partial retirement and work part-time just so that they can continue to engage with their peers. If you do not have a big family, grandkids, or the ability to make new friends to occupy your time, this is something to consider before retiring early.</p><h2><strong>3. Be realistic about your monthly retirement income needs</strong></h2><p>Many people approach early retirement the same as traditional retirement when it comes to their <a href="https://www.businessinsider.com/personal-finance/best-budgeting-apps">budget</a>. However, you will spend more money than you think during early retirement. </p><p>In the early years of retirement, when you are younger, healthier, and have a lot of free time, you may find yourself spending more than you did before retirement. It is common for new early retirees to splurge on travel, home renovations, relocations, and other retirement activities. With no work to do, you are constantly seeking new activities to partake in, which usually have a cost. </p><p>Some other expenses that you may have compared to traditional retirement are mortgage payments, childcare expenses, and debt payments. To prepare for all these expenses, it is important to create a budget and structure where you pay yourself on a set frequency, like a job.</p><h2><strong>4. Plan for unexpected medical expenses or future needs</strong></h2><p>It is inevitable that medical expenses will be one of your largest expenses during retirement. While it is nearly impossible to plan for exact medical expenses, it is important to have a big cash cushion set aside for these needs. When you are analyzing how much of a cushion to set aside, consider factors such as where you plan to retire, how healthy you are, and your estimated life expectancy.</p><p>In addition, Medicare doesn't start until age 65. This means that you will most likely have to apply for private health insurance until then. Private health insurance can be costly, as you do not have the benefit of your employer covering some of the cost. It is essential that you consider this expense before retiring early. </p><p>Another thing to consider is the fact that healthcare costs increase annually due to <a href="https://www.businessinsider.com/personal-finance/what-causes-inflation">inflation</a> and other factors. To plan for these expenses, you should consider at least a 4-5% annual increase for out-of-pocket healthcare expenses during retirement. </p><h2><strong>5. Create passive income to help make your money last</strong></h2><p>With improved healthcare and technology, many people are living much longer. The greatest risk to a successful retirement is that your money will run out at some point. According to <a href="https://www.medrxiv.org/content/10.1101/2022.04.05.22273393v1.article-info" target="_blank" rel="noopener">recent research</a>, the average life expectancy in the US was 76.6 years in 2021. Let's say you decided to retire at age 40. You would have to make your savings last for 36.6 years, on average, compared to 11.6 years if you retire at age 65. This means that your savings would have to last much longer. </p><p>If you are not sure whether you will have enough money to sustain your needs throughout retirement, it may be beneficial to consider creating some <a href="https://www.businessinsider.com/starting-side-hustle-common-questions-answered-2022-5" target="_blank" rel="noopener">passive income streams</a> during your early retirement years. Whether you plan to invest your money in long-term funds that pay dividends or have a rental property that generates positive cash flow, you will not regret having an additional stream of income during retirement.</p><p><em>This article was originally published in May 2022.</em></p>

5 important things to consider before retiring early, according to a financial planner

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="A photo of a senior woman working in a laptop in an office with younger co-workers in the background." height="600" width="1200" msid="91497660" hostid="261"></div><ul class="summary-list"><li>Semi-retirement has become increasingly common as more people slowly transition to life after work.</li><li>People may pursue their passion, work part-time, or consult instead of stopping work altogether.</li></ul><p>Under the traditional idea of <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword>, you work for decades, all the while saving up enough money to ultimately cut the career cord and live a life free from work. The dream is to be able to visit family, travel, volunteer, maybe pursue a favorite hobby. Full retirement was the ultimate goal, representing freedom and stress-free living.</p><p>There was a clear separation between working and retiring. You either did one or the other. That was then. Nowadays, more people nearing or at retirement age are choosing a lifestyle known as semi-retirement, which combines the two.</p><h2><strong>What is semi-retirement? </strong></h2><p>When a person works full time and decides, instead of fully retiring, to work part-time, become a consultant, or work at a more fun or meaningful, they are considered semi-retired. Rather than diving into retirement, they're wading in slowly. </p><p>A person might choose semi-retirement for a variety of reasons.</p><p>Justin Stevens, a CFP® professional with <a href="https://okeefestevens.com/" target="_blank" rel="noopener">O'Keefe Stevens Advisory</a>, points out that financial necessity is often behind the decision. With increased wealth, education, and advancements in medicine leading to longer lives, "retirement today might be a four-decade endeavor," he says.<br /><br />"Coupled with a steadily rising cost of living, there is a higher probability today of running out of money later in life," Stevens says. "Some people prefer to work longer and delay spending their hard-earned savings, delay taking Social Security, and let their money continue to compound."</p><p>Jordan Grumet, <a href="https://www.amazon.com/Taking-Stock-Financial-Independence-Regret-Free/dp/1646043545/ref=tmm_pap_swatch_0?_encoding=UTF8&amp;qid=1650916761&amp;sr=1-1" target="_blank" rel="noopener">author</a> of "Taking Stock: A Hospice Doctor's Advice on Financial Independence, Building Wealth, and Living a Regret-Free Life," notes that just a small amount of income during semi-retirement can make a big difference.</p><p>"Even funding 25% of yearly spending with outside sources can make a previously shakey retirement portfolio rock solid," Grumet says. "Furthermore, employer-sponsored healthcare and access to retirement savings vehicles like 401(k)s with an employer match make semi-retirement an even a wiser choice."</p><p>Others choose semi-retirement simply to remain active. The thought of retirement may strike them as boring. They want a reason to get up in the morning and like a routine. </p><p>Some retirement-aged people leave their regular jobs and take positions that give back or make a difference, even if the pay is a fraction of what they made at their full-time jobs. Still others choose to continue working after retirement to remain engaged with the community. This group might decide to find a job just to be around people, whether they need the money or not. </p><h2><strong>Types of work for the semi-retired</strong></h2><p>There are many options available for semi-retired folks to stay employed in some capacity. They may decide to stay at their current company part-time or decide to consult in their specialty. They might switch gears altogether and try something new that aligns with their hobbies and passions. Or they may take a job with less stress — at a library or grocery store, for example — to pass the time and make some extra money. </p><p>Many employers who once only hired full-time positions are seeing the benefit of keeping retirement-age employees around longer. These employees are loyal, have good work ethics, and offer decades of knowledge and experience. Part-time work and flexible positions are expected to become more common in the next decade.</p><p>And there are likely to be many retirees willing to take them. A 2022 <a href="https://www.ebri.org/" target="_blank" rel="noopener">survey</a> commissioned by the Employee Benefit Research Institute found that 70% of workers think they'll work for pay in retirement. It also showed that only 27% of current retirees are doing so.</p><p>The outlook for work after retirement is changing, says Alan Kirby, a chartered financial consultant with <a href="https://ridgebrooke.com/" target="_blank" rel="noopener">Ridge Brooke Tax and Retirement Planning</a> in Tennessee. There are more options than ever for retirement-age people who want to continue working, either in a scaled-down version of their current role or in a totally different job.</p><p>"Semi-retirement of today has evolved way beyond the idea of leaving a good job to go be a greeter at Walmart," Kirby says.</p><h2><strong>9 tips to set yourself up for semi-retirement </strong></h2><p>If you've researched semi-retirement and think it sounds like a good option for you, start preparing for the change now. Just like full retirement, the sooner you take action the easier the transition will be. These nine tips will help pave the way to a smooth transition into semi-retirement and beyond. </p><h3><strong>1. Make a realistic plan</strong></h3><p>You can't effectively move to the next stage of your life until you know where you are now.</p><p>"One of the most important aspects of semi-retiring is ensuring that you have enough saved up to cover your costs," says Linda Chavez, founder and CEO of <a href="https://seniorslifeinsurancefinder.com/" target="_blank" rel="noopener">Seniors Life Insurance Finder. </a>"Take some time to assess your current financial situation and set goals for how much money you will need to support yourself during semi-retirement."<br /><br />Look at your current spending and debts compared to the retirement assets you'll be tapping. Measuring both gives you an idea of how much income you'll need in semi-retirement. </p><h3><strong>2. Pay off your home</strong></h3><p>Your home is most likely one of your most valuable assets, and your <a href="https://www.businessinsider.com/personal-finance/paying-off-mortgage-early-pros-cons" target="_blank" rel="noopener">mortgage</a> may be your single biggest monthly bill. Taking it out of your budget decreases your expenses significantly. Plus, you have the stability of housing taken care of already.</p><h3><strong>3. Simplify your life and belongings</strong></h3><p>Getting ready to semi-retire is the perfect time for cutting out extraneous expenses and pricey possessions that don't add value to your life. Focus on what matters most to you and eliminate the rest.</p><p>"Before pursuing the semi-retirement lifestyle, you should ask yourself why you want to semi-retire," says Greg Middendorf, a CFP® professional at <a href="https://hcmwealthadvisors.com/about-us/team" target="_blank" rel="noopener">HCM Wealth Advisors</a>. "Having clarity around your reasoning will help you achieve these goals. For a successful outcome, give priority to the things important to you."</p><h3><strong>4. Focus on getting out of debt</strong><strong><br /></strong></h3><p>High debt loads and big monthly payments can strain your budget, especially if you're making less than you did when working full time. Decreasing your debt as much as possible helps semi-retirement go more smoothly. </p><p>"When you decide to live a semi-retired life, it's important that you concentrate on repaying any existing debt you may have," says Middendorf. "Long-standing debt can seriously hamper your financial stability and your dream of semi-retirement."</p><h3><strong>5. Find ways to earn passive income</strong></h3><p>The money you've saved so far is vital, as is the money you'll be able to make in semi-retirement. Consult your financial advisor before you take the plunge to ensure you aren't sabotaging yourself down the road. </p><p>Find investments that create a <a href="https://www.businessinsider.com/personal-finance/investing-after-retirement" target="_blank" rel="noopener">passive income stream</a>. Dividend-paying stocks, certificates of deposit (CDs), annuities, and bonds are among the options. Rental property is another way. Some people create YouTube channels or websites that they can use to generate income. Fall back on your talents to build income helps fund your semi-retired lifestyle.</p><h3><strong>6. Figure out how to make money from your passion</strong></h3><p>Semi-retirement can come sooner if you convert your passion into a money-making stream. Always loved woodworking, gardening, photography, sewing, or drawing? Figure out a way to use those interests to generate income. That way, you get to do what you love and make money. </p><h3><strong>7. Get your health insurance plans sorted</strong></h3><p>One of the most substantial expenses people who semi-retire fail to plan for is their health insurance costs. Many full-time jobs foot the bill for most or all of their employees' health insurance premiums. Those will be your responsibility when you leave your position.<br /><br />"Health insurance before Medicare begins is expensive!" says Patti Black, a CFP® professional at <a href="https://bridgeworthfinancial.com/our-people/patti-b-black/" target="_blank" rel="noopener">Bridgeworth LLC</a>. "Continuing on group health insurance or working part-time may help offset that cost, which can help boost your chances of a financially successful retirement."</p><p>According to <a href="https://justcareusa.org/2022-what-will-your-health-care-costs-be-in-retirement/" target="_blank" rel="noopener">JustCare USA</a>, a digital platform that provides data and information to help baby boomers navigate health-care choices, women who are 65 should have $159,000 set aside for health-care costs. Men who are 65, because they have slightly shorter lifespans, should have $142,000 set aside. </p><h3><strong>8. Look for deals to stretch your dollars</strong></h3><p>In addition to cutting your expenses, take advantage of programs that offer discounts to semi-retired folks.</p><p>Katie Ross, executive vice president at <a href="https://www.consumercredit.com/" target="_blank" rel="noopener">American Consumer Credit Counseling,</a> recommends looking to national and local organizations for discounts on everyday expenses.</p><p>"Organizations like AARP or the Association of Mature American Citizens can help you save money," Ross says. "Your local senior center and town offices might also be of help. Some towns offer seniors abatements on things like real estate taxes and water and sewer bills if you qualify." </p><h3><strong>9. Keep your options open</strong></h3><p>Moving into semi-retirement doesn't mean you'll never be in the full-time workforce again. In most cases, the move is a step toward full retirement, but not always. <br /><br />"If you have any kind of professional credential, license, certification, or security clearance, it's highly recommended that you find a way to maintain them," says Brad Nelson, a CFP® professional at <a href="http://www.lyonparkadvisors.com">Lyon Park Advisors, LLC.</a> "You worked hard for them and they're nearly always much easier to maintain than to regain if you let them drop. The purpose, of course, is to keep your options open if you find that retirement is not for you."</p>

9 tips to set yourself up for semi-retirement

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="rebecca chamaa and husband" height="1967" width="2623" msid="91320308" hostid="261"></div><ul class="summary-list"><li>Experts recommend having enough money saved to live on 80% of your pre-retirement income.</li><li>My husband and I hope to retire in a few years, so we're doing a "test run" this year.</li></ul><p>My husband is eligible for <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> this year, but he's not quite ready to hang up his button-down shirts and the occasional tie. For now, we're reading, prepping, talking about, and experimenting with what retirement will look like financially for us. We're treating this year as a retirement test drive, keeping a close eye on our spending to see how we can afford to make retirement work.</p><p>Besides talking about our love of road trips and the possibility of taking more of those, we read that most experts recommend that you have 80% of your pre-retirement income available to you when you retire. Those experts are saying if you make $70,000, you need to have access to $56,000 a year in savings and investments to live comfortably. If you make $100,000, you need to have $80,000. We don't plan to fully retire, continuing to work in at least some capacity, but we don't want to be tied to jobs, so we need to have a good sense of how much retirement will actually cost.</p><h2>We're tracking our expenses to see how much we really need to have saved</h2><p>In our case, the numbers seem almost impossible, so we are spending our "test" year tracking our expenses to see how much of our income we spend and how much we will need to have saved to retire comfortably. </p><p>To start, we're keeping close track of our spending, looking at our grocery bills, take-out, and entertainment spending (streaming services and cultural events like museums included). We are also keeping track of the bills, like homeowners and car insurance, cell phones, electricity, the occasional trip to see family, or a short vacation. This year we aren't cutting back on anything because we want to see how much we spend in a typical year. We are trying to see if we live the way we want to live, how much does that cost? </p><p>The biggest problem with our plan is guessing the monthly cost of healthcare. How can anyone predict how much getting older will cost, with office visits, medication, surgeries, etc.? So, we are factoring in our insurance costs plus $300 per month for co-pays (our co-pays average $35) and medication (our medications now cost approximately $15 per month). Medication is tricky, though, because if my husband needs a new EpiPen for an allergic reaction or an inhaler for his breathing, that could easily wipe out a month or more of what we are anticipating. </p><h2>There's room to cut back</h2><p>One place we know we could cut back if it turns out we need to is in entertainment. For instance, we don't need two streaming services when one has more than we could watch in a year. Also, we could cut back on take-out and buy annual passes to our local attractions, like the zoo and museums, and that would give us fun things to do any day in retirement but only cost us one fee instead of repeatedly paying each time we felt like going. </p><p>Another way to save that we will be researching, even if it turns out we don't need to, is shopping around for less expensive carriers for our insurance and possibly dropping some coverage (like earthquake) altogether because it is so costly.</p><p>I'm hoping by December 31, we will discover that we live below 80% of our pre-retirement income. Still, if we don't, we will be able to calculate how much money we will have to bring in every month from side gigs to live comfortably, because neither my husband nor I plan on retiring 100%. These figures will be valuable for knowing how much we both have to work in our retirement. It could be the difference between working when we feel like it and taking a consistent, 20-hour-a-week job.</p>

We're doing a retirement 'test run' this year, and by December 31 we'll know exactly how much we need to leave our jobs

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="A photo of a mountain biker helping their companion jump across a crack in a desert landscape." height="600" width="1200" msid="90827847" hostid="261"></div><ul class="summary-list"><li>Mini-retirements are planned breaks from the workforce, usually for a few months or up to a year.</li><li>You should save 50% more than you expect to need during your mini-retirement. </li></ul><p>From the day you enter the workforce, it's normal to start planning your exit. Whether through a <a href="https://www.businessinsider.com/what-is-401k" target="_blank" rel="noopener">401(k)</a>, <a href="https://www.businessinsider.com/what-is-ira" target="_blank" rel="noopener">IRA</a>, or some other investment savings vehicle, one of the primary goals of working is often to save enough so that one day, you don't have to anymore. But what if instead of viewing work and <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> as two large, successive chunks of time, they were braided together throughout the middle decades of your life? This is where mini-retirements come into play. </p><h2><strong>What is a mini-retirement?</strong></h2><p>"I look at mini-retirements as something that's intentional, and it's not necessarily a permanent retirement. It's stepping away," says <a href="https://atlantic-liberty.equitableadvisors.com/Jody--Dagostini,-CFP,-CDFA,-RICP.e1122190.htm" target="_blank" rel="noopener">Jody D'Agostini</a>, a certified financial planner at <a href="https://atlantic-liberty.equitableadvisors.com/" target="_blank" rel="noopener">Equitable Advisors</a> and a <keyword id="13613020" type="UNKNOWN" weightage="60" keywordseo="retirement-planning" source="Orion">retirement planning</keyword> specialist.</p><p>Similar to a sabbatical, mini-retirements generally last anywhere from three months to a year and provide the opportunity to take a break from work for a specific period before re-entering the workforce.</p><p>"It's to provide some oversight of where you are and a pause in the action," D'Agostini explains. "Usually to re-energize and take some time for reflection." Though they often involve traveling or time away from home, this is not a requisite by any means. </p><p>The timing and frequency of mini-retirements is also completely up to the individual. It could be one in the middle of your career, many throughout your entire work life, or whatever makes the most sense in your circumstances. <br /><br />The concept of a mini-retirement is often <a href="https://www.businessinsider.com/early-retirement-vs-mini-retirement-advice-how-to-save-2018-6#:~:text=That's%20where%20a%20mini%2Dretirement,final%20retirement%20at%20the%20end." target="_blank" rel="noopener">credited to Tim Ferris</a> and his book, "The 4-Hour Work Week." The idea of taking these purposeful step-backs has grown more popular as the COVID-19 pandemic <a href="https://www.businessinsider.com/100-people-transforming-business-presents-future-of-work-leaders-2021-11" target="_blank" rel="noopener">reshaped the workforce</a> and significantly changed the way a lot of people think about their jobs and work in general.</p><h2><strong>Why take a mini-retirement?  </strong></h2><p>While there is no singular reason to take a mini-retirement, there are a few commonly cited ones.</p><p>"For me, it was the benefit of refocusing," says <a href="https://kovarwealth.com/team/" target="_blank" rel="noopener">Taylor Kovar</a>, a certified financial planner at <a href="https://kovarwealth.com/" target="_blank" rel="noopener">Kovar Wealth Management</a>. He took a nine-month mini-retirement in 2016 and has since taken a few three-month ones as well. It was also a way for Kovar to combat burnout and think about the future he wanted for himself and his family. "It's really not just an extended vacation," he says. "It was more about my mental health, me, and my family." </p><p>Mini-retirements can also be good trial runs and give people the opportunity to think about the ways they may want to spend their time in end-of-career retirement. They can also be a way to enjoy specific experiences that may be more difficult in older age. There's also the reality that not everyone will live to full-retirement age, so mini-retirements can be a way to reclaim some agency and ensure your lifetime isn't consumed entirely by work. </p><h2><strong>How much should you save for a mini-retirement? </strong></h2><p>At a minimum, you'll want to save enough to cover your living expenses for the amount of time you're not working. However, most experts recommend saving more than that. <br /><br />"I always tell people to have 50% more than you expect," Kovar says. It's also helpful to save an extra few months past your intended return date in case you have trouble finding a job or re-entering the workforce. </p><p>"You really have to create the budget first," D'Agostini says. This means considering all aspects of your current life — everything from mortgages to car payments and student loans — and determining how you'll afford them while you're not working. Maybe that means selling your home or car, or renting them out if you plan to travel. Just make sure you've got a plan for any "back home" expenses in addition to the money you'll need during your time off.</p><p>Taking on some kind of side hustle or remote part-time work could help with the budget, but it's important to remember not to overcommit since the purpose of the mini-retirement is to take a break from work. You'll also want to make sure you've implemented a solid budget while you're taking the mini-retirement and check in frequently to make sure your savings will last as long as you need.</p><p><strong>Quick tip: </strong>End-of-career retirement saving is often done with investment accounts, but the same isn't necessarily true for mini-retirements. Consider your risk tolerance and time horizon when deciding where to save your mini-retirement money.</p><h2><strong>Can you do a mini-retirement if you have debt?</strong></h2><p>Having debt can complicate mini-retirement planning but doesn't necessarily rule it out. However, it greatly depends on where your debt is coming from. If it's a mortgage or a car payment with a relatively low-interest rate, the math may work out in your favor — especially if you can rent the asset if you're not using it. Having a lot of credit-card or other high-interest debt is another story. </p><p>"With a ton of bad debt and you're barely making those debt payments, then you should probably get to a better financial place first," Kovar says. "What's going to happen is you'll be chasing your tail when you get back. It's also going to dictate the kind of job you have to get on your return," D'Agostini added.</p><p><strong>Quick tip: </strong>If you have high-interest debt, don't assume a mini-retirement is never in your future. <a href="https://www.businessinsider.com/personal-finance/how-to-pay-off-debt-fast-strategy" target="_blank" rel="noopener">Make a plan</a> to address the debt and use the mini-retirement as motivation. </p><h2><strong>Are there other factors to consider when taking a mini-retirement? </strong></h2><p>Financial planning is one of the most important considerations when thinking about a mini-retirement. But there are others to take into account as well.<br /><br />Potential career setbacks are a common concern. However, D'Agostini says she's finding many employers now are allowing their employees to take this time away. If you're worried about the impacts a mini-retirement could have on your career trajectory, it may be worth having the conversation with your employer to see if you'd be able to agree on a plan for your return.</p><p>Health care is another important factor to consider. A continuation of your employer-sponsored health insurance under the federal law commonly known as <a href="https://www.businessinsider.com/personal-finance/what-is-cobra-insurance-healthcare-early-retirement-job-loss" target="_blank" rel="noopener">COBRA</a> may be an option. If not, you'll want to factor the cost of a state-sponsored plan into your budget. It's also good to be proactive and think about the timeline for saving for a mini-retirement so that when the need arises to take one, you'll already have the cushion.</p><h2><strong>How do mini-retirements affect long-term financial planning?  </strong></h2><p>There's no one answer to how a mini-retirement can impact your long-term financial planning. It will depend on many factors including your age, how much you already have saved or invested, and how long you're taking off. </p><p>However, know that a mini-retirement <em>can</em> affect other financial goals, like end-of-career retirement, if not planned effectively. It's often best to talk with a professional who can look at your situation specifically and map out exactly how various scenarios would impact your financial future.<br /><br />"We use financial planning software," D'Agostini explains. "We can see the two or three scenarios." From there, you'll be able to decide what option makes the most sense and any steps you'll need to take prior to or on return from the mini-retirement. </p><p>Still, if planned correctly, mini-retirements can be an investment in themselves. By taking the time to refocus, you may come out of them with new goals, values, or even perspectives. "My mini-retirement changed how I thought about money, and I'm a certified financial planner," Kovar said. "Look at it as an investment in yourself."</p>

A carefully planned mini-retirement can provide a remedy for burnout without derailing your financial goals

<p><a href="https://www.businessinsider.com/category/rethinking-retirement"></a></p><div type="image" title="Headshot Martin A. Scott" height="2216" width="2955" msid="91130719" hostid="261"></div><ul class="summary-list"><li>As a financial planner, helping clients reach <keyword id="11909870" type="UNKNOWN" weightage="60" keywordseo="retirement" source="Orion">retirement</keyword> is a key part of my job.</li><li>To get them there, I start by factoring inflation, investment returns, and more into my projections.</li></ul><p>Regardless of their age, about every client (and prospective client) of mine has stated that one of their primary goals is preparing for a secure retirement. Given that most of my clients are in their 30s and 40s, they do not know exactly when they want to retire because this event can potentially be 25 to 30 years from now. However, there is still much <keyword id="12368569" type="UNKNOWN" weightage="60" keywordseo="financial-planning" source="Orion">financial planning</keyword> value to provide to clients as they make progress toward achieving their retirement goals.</p><p>Here are three ways I provide guidance to clients and help them stay on track as they build wealth for retirement.</p><h2><strong>1. I set reasonable assumptions within retirement plan projections</strong></h2><p>Within their service to clients, most advisors use some type of financial planning software, which has a feature that provides retirement plan projections (e.g., probability of success). Many times, an advisor will show a client the projections based on what the client is currently doing and then subsequently show how the projections will improve with a recommended change (e.g., client increases retirement plan contributions, client works more years, etc.). </p><p>An advisor must make several assumptions when doing this type of analysis for a client: <a href="https://www.businessinsider.com/personal-finance/average-stock-market-return" target="_blank" rel="noopener">investment returns</a> on a client's portfolio; inflation rates going forward; level of Social Security benefits; and length of an individual's retirement (i.e., how long they will live). My primary rule of thumb in this planning area is to lean toward being very conservative with these assumptions, which can provide clients a more realistic picture of what to expect going forward. Take the following example.</p><p>John and Mary are both age 40 and have been married for 10 years. They have two children and are making efforts to save for future tuition costs, but also want to prioritize their own <keyword id="13613020" type="UNKNOWN" weightage="60" keywordseo="retirement-planning" source="Orion">retirement planning</keyword>. They hire a financial planner to do a detailed retirement plan analysis for them. Within these projections, their advisor specifically assumed investment returns lower than historical averages (for their risk tolerance in their investment portfolios) and higher than average inflation rates, which both had a negative impact on their progress toward their retirement goal. As a result, this analysis encouraged John and Mary to make more of an effort to save more toward retirement to counter these types of potentially unfavorable situations and still meet their goals.</p><h2><strong>2. I help clients understand that there will be constant changes going forward</strong></h2><p>Providing retirement plan projections to clients is a prudent exercise and provides much value to them, but every number and assumption that goes into this type of analysis will inevitably change. Even further, the level and timing of these changes are simply unpredictable. This can be frustrating to clients and advisors, but it is the reality of financial planning. </p><p>There will be both quantitative (e.g., tax laws, market volatility) and qualitative (e.g., personal situations, health) changes throughout the years approaching retirement, especially when the time horizon is far out. I encourage clients to understand that nothing is set in stone and to remain flexible, which will allow them to adjust to whatever changes they face going forward.</p><h2><strong>3. I make sure clients have the proper wealth protection in place</strong></h2><p><keyword id="11916946" type="UNKNOWN" weightage="60" keywordseo="insurance" source="Orion">Insurance</keyword> might be the least-discussed strategy when addressing retirement planning, but it is the most important. Having <a href="https://www.businessinsider.com/personal-finance/what-insurance-do-i-need-every-age" target="_blank" rel="noopener">proper insurance</a> in place ensures that retirement goals do not get derailed in the event of an unfortunate occurrence or circumstance. </p><p>Over the course of a long horizon of 25 to 30 years, many types of things can happen. Life can take many twists and turns. Maintaining adequate protection of wealth — in the form of insurance — is clearly a prudent decision, but it can also bring peace of mind to an individual who knows that their overall financial plan can withstand adverse events. The following example shows the impact of a wealth protection vehicle.</p><p>Mike and Beth are both in their late 40s and have been married for over 20 years. Their son, Joe, just graduated from college, and they have funded his tuition completely for him over the last four years, which is quite a financial accomplishment. In addition to no more tuition payment obligations, Mike and Beth also maintain sizable retirement accounts, which will allow them to retire early. </p><p>One evening, Mike gets into a car accident and is at fault. The person in the other car is seriously injured and is suing him for a substantial amount of money, which can be a real threat to the couple's overall savings. Mike is found liable in court, but fortunately Mike and Beth followed the advice of their financial planner and purchased an umbrella insurance policy, which provided them the extra liability coverage needed for this situation. As a result, they still were able to maintain their retirement savings and continue forward toward their goal of an early retirement.</p>

I'm a financial planner, and I do 3 things with every client to make sure they can retire exactly when and how they want

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Getty Images / Ramin Talaie</span></p></div><p></p></div></div></p><ul><li><strong>"Normal" is getting stocks at a single-digit price-earnings ratio and 6% dividend yields.</strong></li><li><strong>The bears want to get back to past levels of interest rates and volatility.</strong></li><li><strong>But there's one major distortion in today's market: price-insensitive buying.</strong></li></ul><p>All we get is whining and complaining from the bears all the time. What is it they want?</p><p>Really, they just want things to return to<span> </span><em>normal</em>.</p><p><span>But what is "normal?"</span></p><p>I define normal as follows: when you can get stocks with single-digit P/Es and 6% dividend yields.</p><p>Is that even possible?</p><h2>The Rhetorical Answer Is "Yes"</h2><p>The last time most people remember having an opportunity to buy "cheap" stocks was in 2009. But we were in the middle of a financial crisis/depression, and the environment was very<span> </span><em>distressed</em>.</p><p>And it took some courage to buy cheap stocks. GE traded down to 6 bucks, for example, but a lot of people thought it could go to zero.</p><p>Going back further, people tend to associate the dot-com bubble with the most expensive stocks in history. That is true, but valuations were bimodal.<span> </span><em>Value</em><span> </span>stocks were as cheap as ever.</p><p>The first stock I ever bought when I opened my first brokerage account in 1999: Philip Morris, which had a low single-digit P/E and a huge dividend, right before the $252 billion master settlement.</p><p>Just to show that the market has a sense of humor, I sold it nine months later. If I had held on for 20 years, it would have been a retirement trade.</p><p>Anyway, lots of cheap stocks back then. Lots of expensive ones, too. But if you didn't like the expensive ones, there were cheap ones.</p><p>That's what people are so grumpy about today-no more cheap ones.</p><p>If you really scrounge around now, you could find something that is screening cheap, but it is probably genuinely distressed and you wouldn't want to touch it.</p><p>I don't consider myself to be a full-fledged value investor, but I feel like overpaying for stocks is a negative expected value bet in the long run (even though it has worked, in recent history).</p><h2>Rates, Vol</h2><p>The bears also wish we would get back to normal levels of interest rates and volatility. And you know what-that is (kind of) happening!</p><p>I'd actually say that the Fed is pretty close to what I'd consider equilibrium Fed funds. If I were Jay Powell, I would hike to 2.5% and be done with it, and step back and observe if there were any<span> </span><em>meaningful</em><span> </span>moves in inflation.</p><p>By meaningful, I mean full-point moves, not tenths of a percent. In the past few months, I have come around to the view that the Fed can be<span> </span><em>too</em><span> </span>vigilant, on the upside and the downside. Chillax.</p><p><span>Meanwhile, volatility went up a lot in February, which we've been over before. I've made the case that we've entered a new, higher, regime in volatility, but it sure doesn't seem that way lately.</span></p><p>In order to get volatility meaningfully higher-to what I'd call "normal" levels of 15 to 20 in the VIX-you are going to have to change behavior. Blowing up XIV apparently didn't do the trick. People are back selling vol.</p><p>It's like that scene in<span> </span><em>Ocean's Thirteen</em><span> </span>where they ram the casino with the giant drill to try to get everyone to leave, but they keep playing cards and dice. So they ram it harder.</p><h2>Price-Insensitive Buying</h2><p><em>This is important</em>. If I had to name the number one distortion in today's market (that didn't exist 20 years ago), it is<span> </span><em>price-insensitive buying</em>.</p><p>In the old days, if the price of a stock you liked went up, you might rethink buying the stock. This is simple supply-demand diagram stuff from your economics class.</p><p>Nowadays, there are certain classes of investors who don't really care what the price of the stock is when they buy it. For instance, index fund investors. Index fund investors buy cheap stocks and expensive stocks indiscriminately.</p><p>Remember, prices are signals, and when the signals stop working (insert the<span> </span><em>Law &amp; Order</em><span> </span>"bonk bonk" sound here), capitalism stops working.</p><p>There is also price-insensitive option-selling-there are overwriters and put writers who will sell an option regardless of its implied volatility. If there is any premium at all, they will attempt to collect it.</p><p>And of course, we can't forget stock buybacks, which might in fact be price-<em>sensitive</em><span> </span>buyers-but the other way around! Companies would rather pay higher prices than lower prices for their own stock. That's messed up.</p><p>It is not unheard of for a company to cancel its own buyback if the price of the stock begins to drop. Look at all these buyback announcements-all the stocks are on the all-time highs.</p><h2>1982</h2><p>I was born about 15-20 years too late. I wish I was of investing age in 1982, when we had single-digit P/Es and big fat dividend yields.</p><p>I know what you're thinking. You're thinking I'm such a bear that I would have been scornful of stocks even then.</p><p>I don't think so. Dividend yields in the S&amp;P 500 are 2%. If they were 4%, I would be buying stocks.</p><p>So as far as markets goes, what constitutes "normal?" Is this normal? Is it the<span> </span><em>new normal</em>?</p><p>I'm not that old. I'm 44. I've heard that question asked twice in my career, and I've heard it answered twice-with a resounding…<span> </span><em>No</em>. There is nothing new under the sun. The only thing unusual about this particular trend is how long it has been in place.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/how-having-dog-affects-your-body-brain-pet-oxytocin-animal-baby-2018-5">What having a dog does to your brain and body</a></h3>        <div>                    </div>    </div>

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